No down payment options

Sometimes it can be a challenge to save enough money for a down payment and closing costs. This alone could be holding you back from purchasing your first home sooner than later.

The minimum you require for an owner-occupied home is 5%, or if you want to avoid the high ratio mortgage insurance fees, then your minimum down payment requirement is 20%.

Some lenders, though, offer a Flexible Down Payment Option.

This program allows home buyers to use existing credit facilities and/or gifts or borrowed funds from immediate family members, or even sweat equity to use as their down payment or for their closing costs.

There are a few things to know about this program.

Not all lenders offer this program, so that can limit your mortgage options.

You must have excellent credit and minimal debt. This is a higher-risk product for lenders, so you need to have full-time employment and an excellent credit history with no blemishes. The lender will be looking for low debt-to-income ratios.

You must have a minimum two-year credit history with no history of a bankruptcy or consumer proposal.

You will pay a higher premium for the mortgage insurance, as your down payment would be coming from a non-traditional source - but it’s a negligible difference.

The funds you are borrowing for your down payment will need to be factored into your overall debt picture. That means a reasonable payment will be included in your debt service. Say for example you are planning to use your unsecured line of credit for a portion of your down payment. A 3% monthly payment amount will be used for this debt regardless of the fact you may only have a required interest-only payment.

The Flexible Down Payment option may have more stringent qualifying guidelines, but it is an excellent program to assist getting you into home ownership.

If you would like more information on the Flexible Down Payment program please call me at 250.826.3543 or email me.

April Dunn is the owner and a Mortgage Broker with The Red Door Mortgage Group – Mortgage Architects. She has been assisting clients to purchase, refinance or renew their mortgages for over 20 years.

April has experience as a Credit Union manager, a Residential Mortgage Manager with a large financial institution and as a licensed Mortgage Broker. By specializing in Strategic Mortgage Planning she has the tools available to build a customized mortgage plan, with the features and options that meet your needs.

April provides a full range of residential and commercial mortgage financing options for clients all over the province of British Columbia and across Canada through the Mortgage Architects network.